The relevant facts adduced at trial are as follows. The
McGraw-Hill Company publishes a weekly article in its Business
Week magazine authored by Gene Marcial entitled "Inside Wall
Street." (Tr. at 67-68). The column generally evaluates three
companies with the intention of giving "readers sort of an inside
look at certain stocks that trade on Wall Street." (Id. at 68).
Marcial accomplishes this task by "talk[ing] to CEOs, . . . money
managers, people who manage money for mutual funds or hedge funds
. . . [and] top analysts." (Id.).*fn2

The Inside Wall Street article is available on newsstands on
Friday and is released on the Internet approximately 5:00 p.m.
E.S.T. on Thursday's. (Id. at 134). To ensure that the release
times are adhered to, Business Week follows stringent security
procedures. Testimony was established that at the Business Week
headquarters in Manhattan the column is placed in a queue and
"[o]nly certain people on the magazine have access to that
queue." (Id. at 75-76). Moreover, when the article is written,
the names of the relevant stock are not inserted until Wednesday
at 5:00 p.m. (Id. at 77). In its final version, a single copy
of the column is placed in a red folder and "[i]t is sequestered
and locked in [the] copy editor's desk." (Id. at 78).

In addition to these procedures, it is Business Week's policy
that no writer, editor or reporter is permitted to buy or sell
stock on a subject matter that he has worked on until two weeks
after the information has been divulged to the public. (Id. at
127). Furthermore, if an employee reports on a particular stock
with regularity, the individual is barred indefinitely from
purchasing such stock. (Id).*fn3

After the article is completed, numerous intermediaries are in
possession of the information before it reaches the general
public. From Business Week the column is transmitted
electronically to Applied Graphics Technology ("AGT"). This
facility has also implemented security measures regarding the
article in that an individual can only have access to the file
after inserting a series of passwords. (Tr. at 135-136). From AGT
the information is then electronically transmitted to three
printing plants, namely, R.R. Donnelly Printing Plant in
Torrence, California, R.R. Donnelly Printing Plant in Old
Saybrook, Connecticut and Perry Printing in Waterloo, Wisconsin.
(Id. at 136).

As with Business Week, exacting security procedures are
enforced at the printing plants. For instance, testimony was
elicited noting that the excess paper is shredded in a bailing
room "[b]ecause no one in the printing plant is supposed to have
access to any of the contents of Business Week unless it is
strictly job related." (Id. at 138). Concomitantly, the plant
personnel are informed that during the binding process employees
are prohibited from perusing the material. (Id. at 139).

Testimony also established that in 1995 and 1996, Thomas Tully,
the General Manager of Postal Affairs and Compliance for
McGraw-Hill, distributed reminder letters to the printing plants
detailing the security procedures.*fn4 Such letters were
circulated on an annual basis. (Id. at 142). In addition, plant
personnel were to place notices on the premises detailing
Business Week's concern for confidentiality. (Id.).

After the printing process, Business Week was next disseminated
to a national distributor of magazines, Curtis Circulation
Company ("Curtis") in West Milford, New Jersey. (Id. at
160-161). Curtis, in turn, sold Business Week to various
wholesalers. One such wholesaler was Hudson News ("Hudson").
(Id. at 161-162). To enforce the mandate of the McGraw-Hill
Company, Curtis issued a policy statement to the wholesalers,
including Hudson, noting that Business Week should not be
distributed until after 5:00 p.m. on Thursday's. (Id. at
162-163). It was also established at trial that during the
1990's, Curtis sent representatives to Hudson to conduct an
inventory of the Business Week magazine to ensure that this
policy was adhered to. (Id. at 179-181).

Evidence was further presented concerning the policies of
Hudson with regard to the magazine. Business Week arrived at
Hudson between 10:00 a.m. and 1:30 p.m. on Thursday's. (Id. at
170). For security purposes and because "the information in that
magazine is held very closely" it was company policy that
employees were not allowed to take the magazine from the delivery
department. (Id. at 170-172). It was further established that
"[u]nder the company policy posted in the work rooms, employees
who took magazines from the delivery department . . . were
discharged." (Id. at 172).*fn5 A Hudson employee testified
that the underlying reason for this rule was that the magazines
were "a product entrusted to Hudson News that didn't belong to
us. It belonged
to the publisher. They entrusted it to us." (Id. at 184).*fn6

Business Week ensured that the aforementioned security
procedures were adhered to by following the performance of the
stocks discussed in the "Inside Wall Street" article. (Id. at
94-95). In 1995, Seymour Zucker, the Senior Editor of Business
Week (id. at 66), noticed an abnormal trading pattern among the
stocks mentioned in the column and concluded that individuals
were obtaining information discussed in the article prior to
release to the general public. (Id. at 102-103). As a result,
in January 1996 an article entitled "Is Someone Sneaking a Peek
at Business Week?" was written in the magazine in an effort to
curb this practice and promote a "level playing field." (Id. at
105-107) (Gov't Exh. 17D). In addition, Business Week alerted the
S.E.C. of their suspicion. (Id. at 106). Interestingly, after
the article was written, the abnormality ceased. (Id. at 108).

It was subsequently discovered that the rise of stock price
prior to the article's release was due in part to the following
scheme. Gregory Salvage was a foreman at Hudson and had been
employed by the company for twenty-two years (Id. at 194-195).
Thus, he was fully apprised of Hudson's policy with regard to the
Business Week magazine. (Id. at 197-198). Nevertheless, out of
the prompting of a neighborhood friend and broker, Larry Smath
(id. at 199), Salvage arranged for Smath to receive the "Inside
Wall Street" article before it was made available to the general
public so that he could trade on the stock and thereby realize a
significant profit. (Id. at 205).

To facilitate in this process, Salvage contacted one of his
subordinates in the day shift, Ryan Mohammed, and requested him
to fax the "Inside Wall Street" article to Smath, primarily at
his workplace, prior to the close of the market on Thursday's.
(Id. at 206-8). For his efforts, Salvage was paid two-hundred
dollars ($200) for each article that Smath received. (Id. at
208). In all, the transactions occurred approximately ...

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